Magazine article American Banker

Calif. Eyes State-Government Payments System

Magazine article American Banker

Calif. Eyes State-Government Payments System

Article excerpt

California legislators were due to vote Wednesday on a bill that would mandate a payment system the state's agencies could use to send and receive electronic payments.

The system would have to be up and running by the start of 2009. It would give the state a stronger bargaining position when negotiating transaction processing fees with card companies, according to Assemblywoman Carol Liu, D-La Canada Flintridge, who introduced the bill Feb. 17.

California agencies must now accept credit cards but have set up their own processing relationships.

Jordan Lindsey, a legislative aide to Ms. Liu, said Tuesday that the measure, Assembly Bill 2098, would save "the state lots of money in the long run." It would also save businesses money "by giving them an expeditious way to pay the state as well as an expeditious way to receive payments from the state."

It is too early to estimate the setup cost, he said, but supporting documents say competitive bidding and hardware and software development and installation could come to several million dollars.

Sponsors and supporters, including the State Controller's Office, the California Small Business Association, and the California Bankers Association, say long-term savings would offset that.

The bill was voted out of the Appropriations Committee on May 25. If it clears the Assembly it will be introduced in the state Senate.

The bill says any agency that "determines that joining the system would not be cost-effective" would not have to use it. …

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